As dismal as the housing market has looked in the recent history, there are number of indications that now may be a good time to buy. Homes have become affordable than they have been in years. When the uncertainty of the foreclosure issues in this nation begin to come into focus, we should see a return to normalcy in the market.
So what might the future hold? Let’s examine factors that will direct local markets over the next several years:
- The number of new households formed has declined as a result of the weak economy, only recently beginning to increase to what is expected to be over one million new households over the next ten years. The demand over the next decade will slowly begin to consume the excess supply of housing. It’s worth being aware of the pent-up demand that will overtake the market place as the economy recovers.
- The affordability of housing is measured by the ration of median home prices to median household income. This measure indicates that the increasing affordability of homeownership is becoming a major driver in the market. Although renting is still cheaper than buying in most places, it seems that this won’t be the case for long.
- Prospective homebuyers simply lack the confidence to purchase when the job market is sluggish. Some people must relocate to gain or keep employment and this drives home sales in the market to which they relocate. Data show that housing markets thrive where there is a large influx of job seekers. For example, Washington experienced an increase of over 25,000 jobs since 2010 and consequently saw a rise in home prices.
- As always, credit is absolutely essential for most prospective homebuyers, and mortgage financing has never been an issue for borrowers with good credit scores and reputable employment. Those who don’t fit this bill are finding it more and more difficult to secure loans, as banks are tightening standards for nontraditional loans. The good news, however, is that gradually conditions will improve, and obtaining credit will get easier.
